AN INDUSTRIAL PRATICE SCHOOL PROGRAM

REPORT ON

FUNCTIONS OF ACCOUNTS DEPARTMENT IN KBG CORPORATE CONSULTING PRIVATE LIMITED

A Project Report Submitted in Partial Fulfillment of the Requirements for the Award of Degree of

BACHELOR OF COMMERCE

IN

B.COM(HONS)

By

KRANTHI KUMAR CHEPURI

ID NO: 11052064

Under the esteemed guidance of

CA CS BUTCHI BABU GORANTLA

DEPARTMENT OF COMMERCE

KONERU LAKSHAMAIAH UNIVERSITYGreen Fields, Vaddeswaram,

Guntur, Andhra Pradesh- 522 502.

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KBG CORPORATE CONSULTING PRIVATE LIMITED

Bonafide Certificate

This is to certify that this project report entitle “A REPORT

ON FUNCTIONS OF ACCOUNTS DEPARTMENT IN KBG

CORPORATE CONSULTING PRIVATE LIMITED” submitted

to Department of Commerce, K L University, Guntur, in

connection with the University internship program is a bona fide

record of work done by “KRANTHI KUMAR CHEPURI

(11052064)” under my supervision at the “KBG CORPORATE

CONSULTING PRIVATE LIMITED” from “22NDDECEMBER

2014” to “9THMAY 2015”.

CA CS BUTCHI BABU GORANTA

DIRECTOR

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K L UNIVERSITY

DEPARTMENT OF COMMERCE

Certificate

This is Certified that the project entitled “REPORT ON

FUNCTIONS OF ACCOUNTS DEPARTMENT IN KBG

CORPORATE CONSULTING PRIVATE LIMITED” which is a

practical work carried out by KRANTHI KUMAR CHEPURI

(110520564)in partial fulfillment for the award of the under

graduation in Department of Commerce , during the year 2014-

2015. The project has been approved as it satisfies the academic

requirements.

Department Coordinator Head of the DepartmentMr. K.S.L.S.N.Subramanyam Dr.AVN Murthy Asst. Prof

University Guide External 3

DECLARATION

I hereby certify that the work which is being presented in the report entitled “REPORT ON

FUNCTIONS OF ACCOUNTS DEPARTMENT IN KBG CORPORATE

CONSUTING PRIVATE LIMITED” in partial fulfillment of the requirements for the

award of the degree of bachelor of commerce and submitted in the department of commerce

at college of engineering Koneru Lakshmaiah University, is an authenticated record of my

own work carried out during the period of from 22ND DEC 2014 to 9THMAY 2015 at KBG

CORPORATE CONSULTING PRIVATE LIMITED,HYDERABAD.

KRANTHI KUMAR CHEPURI

11052064

This is to certify that the above statement made by the candidate is correct to the best of our

knowledge. This student is being examined for the viva exam on this day 13th of May

month of 2015

UNIVERSITY GUIDE COMPANY GUIDE

MR KISHORE V MR BUTCHI BABU GORANTLA

B.COM , FCS,ACA

DIRECTOR

Dr. A. V. N. MURTHY

HEAD OF DEPARTMENT

DEPARTMENT OF COMMERCE

K L UNIVERSITY

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ACKNOWLEDGEMENT

Before we get into the thick of things, I do present my wholehearted compliments, with higher regards and warm thanks to one and all, which were the bone behind the sinews of this project. I give all glory and honor to Almighty God whose blessings and help made this Endeavour a success.

I wish to express my sincere thanks to Dr. AVN Murthy, for providing an opportunity to undertake this project and for his invaluable remarks and supervision in completing this project work successfully. And I wish my sincere thanks to Commerce Department CoordinatorMr. K.S.L.S.N. Subramanyam for their valuable guidance and suggestions in the whole course of our mini project activity.

Our sincere thanks to our Regional Manager, and University Guide Mr. Kishore V for his valuable guidance and suggestions in completing our project successfully.

I would like to express our boundless thanks and gratitude to the Company Guide and the managing director in KBG Corporate Consulting PrivateLimited, for their valuable guidance and suggestions in the whole course of our project activity. Also I would wish my sincere thanks to Mr.Butchi Babu Gorantla for his valuable Inputs & Functional Guidance to complete my project successfully

We would like to thank our Institution without which this project would have been a distant reality. We also extend our heartfelt thanks to our family and well-wishers.

With Profound Gratitude

Kranthi Kumar Chepuri

11052064

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OBJECTIVE

The main objective of the industrial program is to expose actual practical working environment and enhancing the knowledge and skills from what I have learned from lectures and the theory. Another purpose of this program is to instill the good qualities of integrity, responsibility and self-confidence. It’s also helps me about the safety practices and regulations inside the industry and to instill the spirit of teamwork and good relationship betweenI and other employees.

Preciously, I have learned in lots of knowledge in Accounting, Taxation, Auditing, Tally, Payroll processing, Corporate compliances working process of Service Tax registrations & filings, process of VAT&CST filing and the reconciliation process Accounting & compliances. And also I learned about how the companies under SEZ are followings the rules under service tax and the process of getting exemptions of service tax payments and. Finally, this program helps to access student’s ability and competency in preparation various statements and accounts in the organization.

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TABLE OF CONTENTS

S.No Particulars Pane No.

1 Cover Page 1

2 Title Page 2

3 Bonafied Certificate 3

4 Declaration 4

5 Acknowledgement 5

6 Objective 6

7 Abbreviations 8-10

8 List of Tables 11

9 Profile of the Company 12-14

10 Function of Accounts Department. 15-60

11 Conclusion 61

12 Bibliography 62

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Abbreviations:

Table 1

Abbreviations Expansion

SEZ Special Economic Zone

EOU Export Oriented Unit

PF Provident Fund

ESIC Employee's State Insurance Corporation

EXIM Policy Export and Import Policy

CLB Company Law Board

FEMA Foreign Exchange Management Act,1999

AGM Annual General Meeting

MIS Management Information System

BOD Board of Directors

AOA Articles of Association

MOA Memorandum of Association

FIRC Foreign Inward Remittance certificate

DTA Domestic Tariff Area

NFE Net Foreign Exchange

PC Procurement Certificates

MNEs Multinational Enterprise's

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STPI Software Technology Parks of India

RBI Reserve Bank Of India

FDI Foreign Direct Investment

FIPB The Foreign Investment Promotion Board

CTC Cost to Company

LOP Loss of Pay

LTC Leave Travel Computation

LLP Limited Liability Partnership

PAN Permanent Account Number

TAN Tax Deduction/Collected Account Number

IEC Importer Exporter Code

S&E Act(AP) Shops & Establishment Act ,1988 (AP)

PT(AP) Professional Tax (AP)

CPBW Customs Private Bonded Warehouse License

SSI Small Scale Industries

MSME Micro, Small and Medium Enterprises

IEM Industrial Entrepreneur Memorandum

MAT Minimum Alternative Tax

HUF Hindu Undivided Family

ITR Income Tax Return

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AOP Association of Persons

BOI Body of Individuals

SDT Specified Domestic Transactions

FY Financial Year

AY Assessment Year

NSS National Savings Scheme

List of Tables& Charts

Table or Chart no

Particulars Page No

10

T 1 Abbreviations 7-9

T 2 ITR Forms 28-29

Fig 1 Types of e-filing 29

Fig 2 Process of e-filing 30

T 3 TDS classification 39-42

T 4 Types of various service tax forms 44-45

PROFILE OF THE COMPANY:

ABOUT THE COMPANY:11

KBG is a professional services firm specializing in CORPORATESERVICES, set-forth with zeal to cater to the CORPORATE AND LEGAL needs of clients in the emerging corporate arena and to provide Assurance, Advisory, Accounting Solutions,Secretarial,Corporate compliances, Corporate Tax and Management Consulting Services to clients.

Based at Hyderabad the organization is strongly motivated to consistently perform up to the industryBenchmark to offer and provide legal & corporate services at an impressive efficiency every year, since its inception in 2001. With a dedicated team of young and dynamic CA’s &CS’s and a strong urge to carve our own niche in the corporate world, we are desirous of emerging as a force to reckon with in the corporate setup today.

Established in 2001 and located in Hyderabad KBG have good experience and have the ability to provide value addition to the clients. Their strength lies in the team and the outlook it has. With a focus on client's necessities and understanding of wide variety of businesses, we are in a position to deliver quality work in any dynamic environment. It is well equipped with sophisticated networking communication equipment and provides readily available latest information technology at all times.

DIRECTORS OF THE COMPANY:

BUTCHI BABU GORANTLA, Director

BUTCHIBABU is a Founder and Director of the company with an overall

experience of 15 years.Butchibabu brings with him firsthand experience in 12

handling Finance, Accounts, Payroll, Taxation and Compliance related matters

for medium to large business enterprises both domestic and multinational

entitiesButchibabu has commanding knowledge on managing and handling the

SEZs, 100% EOU’S as a one stop shop including Accounts, Incometax,

Customs, Central Excise, Service tax, Sales tax, periodical compliances, &

payroll management, and attending assessments for Direct & Indirect Taxes.

Butchibabu brings the indispensable expertise of handling data-driven

transitions and year-end closures. Butchibabu is a realist and leads the

accounting and finance processes.He is an expert in making Project reports and

assignments relating to Accounts, Income Tax and Sales Tax. He has a

valuable five years’ experience in dealing with Income Tax matters. He

specializes in individual and corporate taxation. He was involved in conducting

the due diligence and preparing for the due diligence.

At present he takes care of the activities like Payroll and Accounts

Management on outsourcing basis for medium sized companies in the software

sector. He has sound knowledge about the interpretation and implementation of

Foreign Trade Policy and Foreign Director Investment. He also takes care of

PF and ESI Consulting. Butchibabu is a Fellow member of the Institute of

Company Secretaries of India (ICSI), Associate member of the institute of

Chartered Accountants of India (ICAI) and obtained Bachelor’s Degree in

Commerce.

SRIKRISHNA S CHINTALAPATI, Director

SRIKRISHNA is an Associate Member of the Institute of Company

Secretaries of India. He is the stuff and pillar behind the secretarial needs of

the firms. He undertakes and co-ordinates for registrations with STPI, Customs

&Central Excise authorities and other regular endorsements. He has sound

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knowledge of EXIM policies. At the movement he is the co-coordinator for set

up works in and around Hyderabad be it software or otherwise. Srikrishna

offers specialized advice on all aspects of Company Law, Securities Laws and

Specialist in Listing Compliances, Corporate Takeovers, Legal Advisory and

Finance. His core strength is simultaneously handling both large domestic

corporates and multinational companies.

He has lead more than 50 corporate set ups from entry level to commencing

commercial operations, few of which have been taken over by few foreign

enterprises. He firmly believes in quality work and steady growth of individual

and firm’s growth.

He is adept at conducting of General Meetings and looking after the secretarial

& administrative compliance of various medium sized organizations including

preparation of annual reports of listed companies, CLB petitions & other

regular listing compliances. He was involved in preparation and certification of

secretarial compliance reports, statutory record up dating and secretarial audit.

Presently, he takes care of quality control within the firm. He has sound

knowledge of corporate laws.

FUNCTIONS OF ACCOUNTING DEPARTMENT:

1. Preparation of Books of Accounts and preparation of final financial statements.

2. Statutory Audit.

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3. Income Tax audit.

4. Filing Annual Report, annual Return and Income Tax returns under Companies Act, 2013 and Income Tax Act, 1961.

5. Transfer pricing regulations.

6. TDS (Tax Deducted at Source) Management.

7. Service tax compliances.

8. DTA Compliances.

9. Sales tax compliances.

10. FEMA Compliances.

11. Labour Law Compliances.

12. Payroll.

13. Maintenance of Secretarial Records.

ACCOUNTS:

1. Preparation of Books of Accounts

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As per the Companies Act, 2013 and Income Tax Act, 1961 Books of Accounts comprises of the following:

a. Cash Book and Bank Bookb. Journal Registerc. Sales Registerd. Fixed Asset Registere. Vouchersf. Billsg. Invoicesh. Expenses statements and Income flow statementsi. Office Notes/Memos on Expenditurej. Employees Salary Registerk. Other Statuary Returns

Process of Work Flow:

a. Installation of Relevant Software (say Tally, Wings, Quick Books):Installation of relevant software is according the clients requirement and company norms decided in the latest AGM, the information technology and software will be installed.

b. Preparation of Vouchers supported by Bills and inter office advises:Preparation of vouchers is the part of accounting for the document verification of the each transaction it may be the expenditure or income the company. This process is to know the in and outflow of the funds in the company.

c. Entry of Vouchers in the System

d. Generation of MIS on Periodical basis for the internal purposes of the Management:

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It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

e. Budget preparations:Budget preparation is the very decisive chunk in any business activity. The Responsibility towards our clients is too accountable each and every coinage to the client though preparation of budget.

f. Preparation of Bank Reconciliation Statements:As we all know that now a days every corporate is using a bank account for their business purpose. And our work is to maintain the bank account statements in the accounting software and we have to conduct the reconciliation process to match the bank and cash balances.

g. At the year-end preparation of financial statementsWe prepare the various financial statements for the corporate and the preparation of statements according the rules and submit to the need parties.

h. Making adjustments related to Income Tax (this is very crux point for our company):This is one of the core tasks of our company. As an accountant the main concern to reduce the income tax burden to the clients in fair practices.

i. Finalization of All books of Accounts:Finalization of all books of accounts is closing of books of accounts for the particular accounting period and the financial statements forwarded to the various government agencies on periodical basis.

2. Statutory Audit

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“A legally required review of the accuracy of a company's or governments financial records. The purpose of a statutory audit is the same as the purpose of any other audit - to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.”

All the Books of Accounts and vouchers, bills and invoices have to be submitted to Statutory Auditors for their report and comments on the Company.

Statutory Audit for a Company is must for every Company registered in India as per the Companies Act, 2013. An Auditor has to be appointed for these purposes.

The Report issued by the Auditors is called as “Auditors Report” and this report includes the statutory compliances and financial system of the Company in detail.

This report has to be forwarded to the various government agencies on periodical basis.

Process of work flow:

As an accountant working under the auditor these are my responsibilities at the time of Statutory Audit:

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Guide and lead audit teams to achieve audit goals and objectives.

Review of all customers, vendors and ledger balances.

Verification of vouchers various important documents relating to the business activity.

Find out the mistakes and misappropriations in the accounts.

Document all audit reports and findings for the top management.

 Confirming accounts receivable and other accounts with a third party

Observing the physical inventory count

Implement best practices and procedures in all audit systems and accounting functions.

Preparation of final report of the audit work and it include the all the findings and results of the audit.

3. Income Tax AuditTax Audit is compulsory for the following:

1. A person carrying on business, if the total sales, turnover or gross receipt in business for the accounting year or years relevant

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to the assessment year exceed or exceeds Rs. 1 Cr . (Rs.60 Lakhs up to F Y 2012-13)

2. A person carrying on profession, if his gross receipts in profession for an accounting year or years relevant to any of the assessment year exceeds Rs. 25 lakh. (Rs.15 Lakh up to FY 2012-13)

3. A person whose income is assessed on a presumptive basis under section 44AE, 44BB or 44BBB. Where such an assessee declares an income lesser than presumed under the sections 44AE, 44BB or 44BBB, they are required to get their accounts audited in accordance with section 44AB. (44AE – business of plying, hiring or leasing goods carriages, 44BB – business of exploration etc. of mineral oils, 44BBB - foreign companies engaged in the business of civil construction, etc in certain turnkey power projects.)

4. A person whose income is assessed on a presumptive basis under section 44AD (w.e.f. 01.04.10). Where such an assesse declares an income lesser than presumed under the sections 44AD, they are required to get their accounts audited in accordance with section 44AB. Unlike the persons specified in the 3rd point, the persons specified here are only required to their accounts or books audited if their income exceeds the basic exemption limit.

This report gives comment on the various Income Tax provisions to be followed by the Company.

For Example: A cash payment to any person in excess of Rs. 20,000/- per bill is not allowed. However, certain exemptions are

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available.The Income Tax Audit report has to be attached to the Income Tax return to be filed with the department at year end.

After section 43 of the Income-tax Act, the following section shall be inserted, namely:-

'43A. Special provisions consequential to changes in rate of exchange of currency—(1) Notwithstanding anything contained in any other provision of this Act, where an assessee has acquired any asset from a country outside India for the purposes of his business or profession and, in consequence of a change in the rate of exchange at any time after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency for making payment towards the whole or a part of the cost of the asset or for repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset (being in either case the liability existing immediately before the date on which the change in the rate of exchange takes effect), the amount by which the liability aforesaid is so increased or reduced during the previous year shall be added to, or, as the case may be, deducted from, the actual cost of the asset as defined in clause (1) of section 43 or the amount of expenditure of a capital nature referred to in clause (iv) of sub-section (1) of section 35 or in section 35A or in clause (ix) of sub-section (1) of section 36 or, in the case of a capital asset (not being a capital asset referred to in section 50), the cost of acquisition thereof for the purposes of section 48, and the amount arrived at after such addition or deduction shall be taken to be the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset as aforesaid.

Process of work flow:

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Detailed verification of the background statutory information of the assessee.

Verification of the Nature of the Business, profit sharing ratio and the registration certificates.

Verification of capital inflow /outflow of the business and each and every journal entry transactions.

Verification of the policies whether they following the norms under the Income Tax Act, 1961 and see that there are no Deviations in the business.

Whether books of account are prescribed under section 44AA, if yes, list of books so prescribed.

Whether the profit and loss account includes any profits and gains assessable on presumptive basis, if yes, indicate the amount and the relevant section (44AD, 44AE, 44AF, 44B, 44BB, 44BBA, 44BBB or any other relevant section).

Verification of Method of accounting employed in the previous year.and checking that there has been any changes in the method of accounting employed vis-à-vis the method employed in preceding previous year.

Verification of the computation method depreciation on assets according to the IT Act and Companies Act.

Verification of the balance sheet whether it is in the prescribed format or not.

Preparation of the report on the entire Tax Audit and submit to the concern parties.

4. Secretarial Audit:Secretarial Audit is a process to check compliance with the provisions of various laws and rules/regulations/procedures, maintenance of books, records, etc., by An Independent Professional to ensure that the company has complied with the legal and procedural requirements and also followed due

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processes. It is essentially a mechanism to monitor compliance with the requirements of all the laws/rules/regulations applicable onto a Company.

The scope of Secretarial Audit is very broad and the practicing Company Secretary has to report on the compliance of all the laws applicable onto the company in addition to Companies Act, 2013 (including any rules and regulations made thereunder), the Listing Agreement and Secretarial Standards issued by the Institute of Company Secretaries of India. Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 provides that the format of the Secretarial Report shall be in Form No – MR – 3.

Process of Work Flow:

Verification of Registers and Records of the company. The registers like:Statutory Registers.

Register of Inspection. Register of Director’s Attendance. Register of Shareholder’s Attendance. Register of Proxies Register of Share Transfer Details.Register of Fixed Assets and Document sealed

Verification of Forms, Returns & Documents like; Annual returns, Balance Sheet, return of allotments, and changes in the resolutions.etc.,

Meeting of Directors and Minutes. Closure of Register of members or Debenture holders. Annual General Meeting (AGM0 and Minutes. Verification of Extraordinary General Meetings and Minutes. Verification of Loans to Directors. Verification of agreements between directors. Issues of Capital & Securities.

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Verification of Appointment of Directors, Managerial Personnel, Sole Selling Agents and Auditors.

Verification of Barrowings, loans to the companies, Deposits and Banker’s certificates if any.

Verification of prosecution notices, Deposit of Employee’s security and The Provident Fund details.

Check list for the other compliances. Verification of the compliances for SEBI Preparation of the Secretarial Audit Report and Submit to the

required concerned authorities.

5. Filing Annual Report, Annual Return and Income Tax returnsAnnual Report:

After obtaining all the above statements and reports, the Company has to conduct a Annual General Meeting and those

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report has to be adopted by the Shareholders. Before the Meeting the Directors also have to place their report called “Directors Report” detailing the activities conducted during the particular year.

Finally Annual Report comprises of the following:

Annual General Meeting (AGM) Notice:

The annual general meeting is typically the only time during the year when shareholders and executives interact. If a company needs to resolve a problem in between annual general meetings, it may call an extraordinary general meeting. Activist shareholders may use annual general meetings as an opportunity to express their concerns.

Directors Report

A statement by a company's Directors in its annual accounts giving the directors' opinion of the state of the company, and how much should be paid to people owning shares in the company

Auditors Report

Document prepared by the auditors appointed to examine and certify the accounting records and financial position of a firm. It must be filed every year by an incorporated or registered firm (along with its audited financial statements) with the appropriate regulatory authority.

Balance Sheet

The balance sheet presents a company's financial position at the end of a specified date. Some describe the balance sheet as a

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"snapshot" of the company's financial position at a point (a moment or an instant) in time.

Profit & Loss Account:

The profit & loss account summarizes the revenues and expenses generated by the company over the entire reporting period. The profit & loss statement is also known as the income statement, statement of earnings, statement of operations, or statement of income.

Schedules attached to the above:

In the balance sheet each segment will noted as a schedules or notes.

A Balance sheet abstract:

Balance Sheet Abstract is additionalinformation Under Part IV of the Schedule VI to the Companies Act, 1956.

This report has to be filed with the Registrar of Companies within 30 days of the AGM. The due date for AGM for the year ended on 31st March is 30th September.

Annual Return:

The annual return contains the following details of the company:

Share capital details:

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The share capital details include the details about authorized share capital and paid up share capital.

Shareholders list

Transfer of shares:

Shares are freely transferable to other members, or members of the family (defined) of the shareholder, but that other transfers may be refused by the directors. There can be provisions that a person who ceases to be a director has to transfer their shares

Board of Directors (BOD):

Governing body (called the board) of an incorporated firm. Its members (directors) are elected normally by the subscribers (stockholders) of the firm (generally at an annual general meeting or AGM) to govern the firm and look after the subscribers' interests.

Modifications in MOA & AOA :

The material amendments, additions and deletions proposed to the Articles of Association (AOA) and Memorandum of Association (MOA), those amendments will be displayed in the AGM notice.

Share holding pattern of the company :

According to the companies act and income tax act the corporate or company should follow the rules and regulation while allotting

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the shares to the members or directors or at the time of public issue.

This return has to be filed annually along with the Annual report with the Registrar of Companies.

Income Tax return:

After obtaining the approved balance sheets and various required statutory reports to file income tax returns of schedule VI under Income Tax Act, 1961 and Companies Act, 2013 in the AGM and relevant certificates are obtained; Income tax return for the particular year has to be prepared. This will comprise of the following:

Income tax return in the prescribed format:

Various ITR forms for Assessment Year 2014-15:

Table 2

ITR Description

ITR 1(SAHAJ) For individuals having income Salary and Interest.

ITR 2 For Individuals & HUFs not having income from Business and Profession.

ITR 3 For Individuals/HUFs being partners in firm and not carrying out business or profession under any proprietor ship.

ITR 4 For Individuals/HUFs having income from proprietary business or profession.

ITR 4S For Individuals/HUFs having income from presumptive 28

(SUGAM) business.

ITR 5 For firms, AOPs ,BOIs and LLPs.

ITR 6 For companies other than companies claiming exemptions under section 11.

ITR 7 For persons including companies required to furnish return under sec 139(4A) or section 139(4B) or section 139(4C) or section 139(4D).

Types of e-Filing:

Figur.1

Process of e-Filing:

Figur.2

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Computation statement of the Income of the Company

Depreciation statement as per Income Tax act, 1961.

Depreciation as per Companies Act, 2013.

Tax exemption certificates(Ex. FORM :56F)

MAT computation ( u/s 115jb of ITact,1961)

MAT stands for Minimum Alternate Tax and AMT stands for Alternate Minimum Tax. Initially the

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concept of MAT was introduced for companies and progressively it has been made applicable to all other taxpayers in the form of AMT. In this part you can gain knowledge about various provisions relating to MAT and AMT. First of all we will understand the provisions of MAT and thereafter the provisions of AMT.At times it may happen that a taxpayer, being a company, may have generated income during the year, but by taking the advantage of various provisions of Income-tax Law (like exemptions, deductions, depreciation, etc.), it may have reduced its tax liability or may not have paid any tax at all. Due to increase in the number of zero tax paying companies, MAT was introduced by the Finance Act, 1987 with effect from assessment year 1988-89. Later on, it was withdrawn by the Finance Act, 1990 and then reintroduced by Finance (No. 2) Act, 1996, wef1-4-1997. The objective of introduction of MAT is to bring into the tax net "zero tax companies" which in spite of having earned substantial book profits and having paid handsome dividends, do not pay any tax due to various tax concessions and incentives provided under the Income-tax Law. Since the introduction of MAT, several changes have been introduced in the provisions of MAT and today it is levied on companies as per the provisions of section 115JB.

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As per the concept of MAT, the tax liability of a company will be higher of the following:

Tax liability of the company computed as per the normal provisions of the Income-tax Law, i.e., tax computed on the taxable income of the company by applying the tax rate applicable to the company. Tax computed in above manner can be termed as normal tax liability. Tax computed @ 18.5% (plus surcharge and cess as applicable) on book profit (manner of computation of book profit is discussed in later part). The tax computed by applying 18.5% (plus surcharge and cess as applicable) on book profit is called MAT.

Tax Audit Report:

There are various types of audits prescribed under different laws like company law requires a company audit; cost accounting law requires a cost audit, etc. The Income-tax Law requires the taxpayer to get the audit of the accounts of his business/profession from the view point of Income-tax Law.

Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax

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Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44ABis called tax audit.

The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of audit report. The report of tax audit is to be given by the chartered accountant in Form Nos. 3CA/3CB and 3CD.

FIRC and DTA Certificates :

FIRC - A Foreign Inward Remittance Certificate (FIRC) is a document that acts as a testimonial for all the inward remittances entering India. Most of the statutory authorities accept this document as proof that an individual or a business, such as a limited company, partnership firm, sole proprietorship firm and others, has received a payment in foreign currency from outside the country.

Once your overseas client pays your sale proceeds to your account, a certificate is issued by your bank in this regard mentioning the details of remittance made by your client. This is a proof of receipt which is required to submit with various government authorities while applying for financial assistance and other government support.

This certificate is issued by the banker authorized from The RBI and the responsibility to collect the account holder

DTA 33

DTA stands for Domestic TariffArea. The Units which are located in India and clear its finished products on payment of duty as per Central Excise Tariff Act 1985 and exports on the basis of undertaking or bond are called as DTA unit. EOU stand for 100% Export oriented unit. The unit is established under the scheme of EOU and a 100% EOU is set up to clear its finished goods to export purpose. The theme of EOU to called the NFE (Net foreign exchange). It procures the duty free goods on the strength of form CT-3 & PC (Procurement Certificate in case of import)

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6. Transfer Pricing Regulations:

1. Transfer pricing provisions were earlier restricted to international transactions. With effect from 1.4.2013, the scope of transfer pricing provisions gets extended to specified domestic transactions (SDT) exceeding Rupees five crore in value.

2. Notification no. 41/2013 dated 10th June, 2013 has amended the FORM-3CEB i.e. report under section 92 E regarding international and specified domestic transaction.

3. The amended Form No. 3CEB contains 25 clauses requiring disclosure of the details of the various international transactions and SDT. It is divided into the three parts:

Part A: requiring the taxpayer to provide general information about itself along with the aggregate value of international transactions and SDT.

Part B: requiring the taxpayer to provide the details of the international transactions entered into during the Financial Year.

Part C: requiring the taxpayer to provide the details of SDT entered into during the FY.

Provisions of international transaction (section 92B):

International transaction means a transaction between two or more associated enterprises, either or both of whom are nonresidents. The transaction may be in the nature of purchase, sale of intangible or tangible property or provision of service or any other

35

transaction having bearing on the profits, income, losses or assets of such enterprise.

Provisions of Specified domestic transaction (section 92BA):Specified domestic transaction means:-

a. Any expenditure in respect of which payment has been made to related party i.e. having substantial interest (more than 20% voting power) referred to in section 40 A(2)(b)

o In case of transactions between two related parties of goods and services, only the purchaser is to comply and not the seller

o Only expense side is covered and i.e. only revenue expenditure and not items of income

b. any transaction referred to in section 80A (correspond to the market value/arm’s length price of such goods or services)

c. any transfer of goods or services referred to in sub-section (8) of section 80-IA (interunit transfer of goods and services)

d. any business transacted between the assesse and other person as referred to in sub-section (10) of section 80-IA (applies to transactions between the assesse and any other person which results in excessive profits in the hands of the assesse)

e. any transaction, referred to in any other section under Chapter VI-A or section 10AA, to which provisions of sub-section (8) or sub-section (10) of section 80-IA are applicable. They are listed below:• 80-IAB- Deductions in respect of profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone.

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• 80-IB- Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings• 80-IC- Special provisions in respect of certain undertakings or enterprises in certain special category States• 80-ID- Deduction in respect of profits and gains from business of hotels and convention centers in specified area• 80-IE- Special provisions in respect of certain undertakings in North- Eastern States.

f. any other transaction as may be prescribed.

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7. TDS (Tax deducted at Source) Management

Tax Deducted at Source means the deduction of Income Tax from the Payees and pays it to the Department on their behalf and issues them the necessary certificates to claim the same. This provision is introduced to collect the taxes in advance before filing of the Income Tax return.

TDS Rates for Payments other than Salary and Wages to Residents (including domestic companies) for FY 2014-15 (AY 2015-16)

Table 3

Section For Payment of On Payments Exceeding

Individual/ HUFs

Others

193 Interest on Securities

Rs. 5000/- 10% 10%

194 Deemed Dividend

No minimum 10% 10%

194 A Interest other than on securities by banks

Rs. 10000/- 10% 10%

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194 A Interest other than on securities by others

Rs. 5000/- 10% 10%

194 B Winnings from Lotteries / Puzzle / Game

Rs. 10000/- 30% 30%

194 BB Winnings from Horse Race

Rs. 5000/- 30% 30%

194 C (1)

Payment to Contractors

Rs. 30000/- for single payment

1% 2%

Rs. 75000/- for aggregate

194 C (2)

Payment to Sub-Contractors / for Advertisements

payment during Financial Year

194 D Payment of Insurance Commission

Rs. 20000/- 10% 10%

194 EE Payment of NSS Deposits

Rs. 2500/- 20% NA

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194 F Repurchase of units by Mutual Funds / UTI

Rs. 1000/- 20% 20%

194 G Commission on Sale of Lottery tickets

Rs. 1000/- 10% 10%

194 H Commission or Brokerage

Rs. 5000/- 10% 10%

194 I Rent of Land, Building or Furniture

Rs. 180000/- 10% 10%

Rent of Plant & Machinery

Rs. 180000/- 2% 2%

194 IA Transfer of Immovable Property (w.e.f. 01.06.2013)

Rs. 50 lacs 1% 1%

194 J Professional / technical services, royalty

Rs. 30000/- 10% 10%

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194 J (1)

Remuneration / commission to director of the company

- 10% 10%

194 J (ba)

Any remuneration / fees / commission paid to a director of a company, other than those on which tax is deductible u/s 192.

- 10% 10%

194 L Compensation on acquisition of Capital Asset

Rs. 100000/- 10% 10%

194 LA Compensation on acquisition of certain immovable property

Rs. 200000/- 10% 10%

In this regard the Company should do the following:

Tax deduction account number to be obtained41

Deduct the tax amount and pay it to the department before 7th of every month

Quarterly Returns to be filed Tax credit form to be issued to the vendors. Ensure that Sec.40(a)(i) & 40 (a)(ai) are followed or not.

8. Service Tax Compliances

Since the company being the Exports unit, It can claim 100% Service

tax exemption for the exports amounts received in India and to claim

this certain procedures to be followed.

The present rate of tax is @12.36% and this is exempted for DTA

units.

To claim the exemption and as part of compliances the following are

required to be done:

A Procure the Service Tax Registration

B File the quarterly/half yearly returns

C Procure the Exemption Certificate

D Procured the Refund certificate for certain services where

Service tax to be paid and claim the refund on quarterly basis.

Process of work flow:

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To obtain the service tax registration, need to fill the Form ST-

1 in duplicate in the Service Tax official website.

Copy of PAN card is necessary as a PAN based code (Service

Tax Code) is allotted to every assessee.

These forms are required to be submitted to the jurisdictional

Central Excise office (in case of six Service Tax

Commissionerates, to the jurisdictional Division office. There

are separate service tax commissionerates in Mumbai, Chennai,

Delhi, Kolkata, Bangalore and Ahmedabad as mentioned in the

previous chapter).

Verification process of the documents certification.

These are the various form Types to complete the service tax

compliances.

Table 4

Form type

Brief Description

Form-SC(ST)-1

Form of application for settlement of a case under section 32E of Excise Act made applicable to service tax vide section 83 of the Finance Act, 1994 (32 of 1994)

Application

Application for Compounding of Offence

Proforma Proforma for forwarding the proposal for publishing of names and other details  in r/o Service Tax (Provisional Attachment of Property) Rules, 2008

Form-VCES-1

Declaration under Service Tax Voluntary Compliance Encouragement Scheme

Form-VCES-2

Acknowledgement of declaration under Service Tax Voluntary Compliance Encouragement Scheme

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Form-VCES-3

Acknowledgement of discharge under Service Tax Voluntary Compliance Encouragement Scheme

Form-1 Form of declaration under Section 94 of the Finance Act, 2008 in respect of Dispute Resolution Scheme, 2008

Form-2 Certificate for full and final settlement of tax arrears under Section 96 (2) of the Finance Act, 2008 in respect of Dispute Resolution Scheme, 2008

G.A.R. 7 G.A.R. Proforma for Service Tax payments (For payments from April, 2007 onwards) [Front]     [Reverse]

ST - 1 Application form for registration under Section 69 of the Finance Act, 1994

ST - 2 Certificate of registration under Section 69 of The Finance Act, 1994 (32 of 1994)

ST - 3 Return under Section 70 of the Finance Act, 1994 read with Rule 7 of Service Tax Rules, 1994

ST - 3A Memorandum for provisional deposit under rule 6 of the Service Tax Rules, 1994

ST -     4 Form of Appeal to the Commissioner of Central Excise (Appeals)

ST - 5 Form of Appeal to Appellate Tribunal under sub-section (1) of section 86 of the Finance Act, 1994

ST - 6 Form of Memorandum of Cross-Objections to the Appellate Tribunal under sub-section (4) of section 86 of Finance Act, 1994

ST - 7 Form of Appeal to Appellate Tribunal under sub-section (2) of section 86 or sub-section (2A) of section 86 of the Finance Act, 1994

AAR (ST-I)

Application for Advance Ruling (Service Tax)

ASTR - 1 Application for filing a claim of rebate of service tax and cess paid on taxable services exported

ASTR – 2 Application for filing a claim of rebate of duty paid on inputs, service tax and cess paid on input services

Application

Proforma for Application for permission to file ST-3 Return electronically

Form - A Application for refund of CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004

Form - A1 Declaration by the SEZ Unit or Developer for availing ab initio exemption

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Form - A2 Authorization for procurement of services by a SEZ Unit/Developer for authorised operations

Form - A3 Quarterly return to be furnished by the SEZ Unit/Developer furnishing the details of services procured without payment of service tax

Form – A4 Application for claiming refund of service tax paid on specified services used for authorised operations in SEZ

9. Exports - Customs and Excises Compliances:

Since the company being the DTA, the Unit needs to comply with

following and at present no concessions/exemptions for goods

procurements.

File Monthly Invoice for Exports and obtain the Certificate

(SOFTEX):

SOFTEX forms are to be filed with STPI to regulate inward

outward remittance by Reserve Bank under export of goods in

non-physical form, either domestic or offshore. The products

includes computer software, export of Video and TV software

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and all other types of software products and packages which are

falling under goods of non-physical form.

Online Submission of

documents/permissions/returns/approvals/intimations etc.

Maintenance of Registers

A. Import Register ( Bill of Entry)

B. Local Goods Register

C. Inventory Registers for capital goods

D. Sales tax exemption registers if any.

10. Sales Tax Compliances:

A tax imposed by the government at the point of sale on retail goods and services. It is collected by the retailer and passed on to the state. It is based on a percentage of the selling prices of the goods and services and set by the state. And these are the following compliances under sales tax:

Procure the registration:We do the sales tax registration certificate from the concern government authorities on behalf of the client and procure the physical form of certification.

File a monthly return of exports:

File a annual return of exports

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Procure the way bill to get the goods from outside Andhra Pradesh

Annual Assessment for “NIL” tax claiming the DTA Exemption

11. FEMA COMPLIANCES

Procure the Foreign Inward Remittances for Investments in India and Exports amount for services received from India

Inform to Bank & Reserve Bank of India (RBI)

Allocation of shares and Filling to RBI in FC-GPR form

Procure the Approval for Foreign Direct Investment (FDI) in India.

Once Exports money is received (including advances) documents to be submitted to the Banker attaching the DTA SOFTEX form certifying the exports from India.

File half yearly return to RBI on FDI, Exports and Imports.

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Process of work flow:

Obtaining the necessary permissions from the Reserve Bank of

India (RBI)

Secretariat of Industrial Approvals from the Government

authorities

Dealing with the Foreign Investment Promotion Board (FIPB)

on behalf of our clients

Consultation in FDI Scheme and obtaining suitable permissions

for the clients.

Preparation and filing of Forms such as FC-GPR and FC-TRS

to submit to the various government agencies

Setting up wholly owned subsidiaries, liaison / branch offices

in India

Taking care of FDI Policies and its compliances / undertaking

takeover through transfer procedures by the clients.

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12. Labour Law Compliances:

Statutory compliance under various labor laws has to be ensured by establishments. It is not just limited to the statutory deposits, returns and records to be maintained by the employer under various labor laws, but also to represent them in case of prosecution under various statutes.

A company incorporated in India having more than 20 employees is required to comply with the Labour laws relating to Employee Safety and Welfare measures taken up by the company. In this regard, the following documents are to be filed on annual basis.

Payment of Annual Welfare fund: For annul welfare funds employer and employees must contribute according to the related statutory acts and local government authority rules and regulations.

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Renewal of Establishment registrationAccording to shops & establishment act of Andhra Pradesh every company needs renewal the registration and maintaining the physical certification forms for previous periods.

A monthly return of employees information:At the time of payroll process in each month specific sum from the monthly pay will be contributed and preparation of spread sheets for the clients.

Maternity benefitsWhere a woman has delivered a child and dies during her delivery or during the period immediately following the date of her delivery for which she is entitled for the maternity benefit, leaving behind in either case the child, the employer shall be liable for the maternity benefit for that entire period but if the child also dies during the said period, then for the days up to and including the date of the death of the Child. 6 weeks leave with wages for tubectomy and two weeks immediately following the day of an tubectomy. Nursing breaks – Two times in the course of daily work till the child attains 15 months. Prohibition from dismissal for absence during pregnancy. However, for Misconducts, forfeiting of Maternity Benefit and Medical bonus permissible.

Minimum Wages :Payment of Minimum Wages A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Minimum wage is the wage that is able to provide not only for bare physical needs but also for preservation of efficiency of worker plus some measure of education, health and other things. The minimum wage must be paid irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen at lower wages.

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The minimum wage gives employers a guideline as to the legal minimum amount paid to employees.

Bonus compliances:The Payment of Bonus Act, 1965 Section 8: Eligibility for bonus- Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he/she has worked in the establishment for not less than thirty working days in that year. Section10: Payment of minimum bonus- a minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year

Gratuity:

Gratuity is a part of salary that is received by an employee from his/her employer in gratitude for the services offered by the employee in the company. Gratuity is a defined benefit plan and is one of the many retirement benefits offered by the employer to the employee upon leaving his job. An employee may leave his job for various reasons, such as - retirement/superannuation, for a better job elsewhere, on being retrenched or by way of voluntary retirement.

As per Sec 10 (10) of Income Tax Act, gratuity is paid when an employee completes 5 or more years of full time service with the employer(minimum 240 days a year).

Payment of salaries Form.

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List of holiday and Festivals form.

13. PAYROLL :

The sum total of all compensation that a business must pay to its employees for a set period of time or on a given date. Payroll is usually managed by the accounting department of a business. Small-business payrolls may be handled directly by the owner or an associate.

Payroll can also refer to the list of employees of a business and the amount of compensation that is due to each of them. Payroll is a major expense for most businesses and is almost always deductible as such.

Payroll can differ from one pay period to another due to overtime, sick pay and other variables.

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Payroll including the Benefits & Reimbursements:

Periodical:

Structuring of CTC including the Tax Management:

Definition of Cost to Company differs from company to company

and every company has its own structure and salary components

which company wants to make part of CTC. For simple

understanding, let me define CTC which includes cost which

company incur on employee in form of statutory contributions,

reimbursement, benefits and sometime administrative costs other

than Gross salary of employee.

We will understand all the possible components which company

can put in CTC and what is the impact of these components on

your in hand and tax liability.

Benefits & Reimbursements Planning

Investment Declarations compilation:

Employee Tax Planning and Advisory services.

Advisory services on Benefits Planning like Car Schemes etc.

Fringe Benefit Tax and Employee Perquisites Valuations

Final Settlements

Employee Account on Exception Basis.

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Monthly:

Monthly Payroll processing

Payslips

TDS Computations

Variable pay management

Monthly Fringe Benefit Tax

Monthly Employee Perquisites.

MIS Reporting.

Reimbursements Processing

Verification of Reimbursements.

Loans & Advances Account maintenance

Query Handling and Management.

Bonus Accounting.

Statutory compliance Management

Provident Fund Management

ESI if necessary

Gratuity Management

Annuity Fund Maintenance if necessary

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Profession Tax Compliances

Shops & Establishment Rules compliances

Contract Labour Rules compliances

E-TDS Returns

Issuance of Form 16’s and 24Q

List of Reports

We can provide the following Standard Reports and Documents to our clients:

1. Consolidated Monthly Salaries Disbursement Report.

2. Reimbursements in hold statement.

3. Provident Fund computation statement on Account wise

Remittances.

4. ESI Contributions Profession Tax report.

5. Income-tax deduction statement

6. Loans, Advances & Any other recoveries statement if

necessary

7. Employee concession Loans/Benefits if necessary

8. Employee Perquisites Evaluations.55

9. Labor Welfare Fund Remittances on annual basis

Online Services:

a) Employee will be given a User ID and Password for

accessing his pay slips, tax computation and Investment

Declaration.

b) Password change

c) Submission of Investments declarations.

d) Leaves management (optional)

INPUT DATA REQUIRED FORM THE COMPANY

Input Data Requirements from the Company

Company Information in the required format

Employee Information

Employee Investment Declaration.

Company HR Policies.

HR Manual.

Statutory Compliances details.

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Input Data Requirements from the Company for Monthly Payroll Processing:

1. New Joiners List

2. CTC list

3. Attendance

4. LOP/Leaves.

5. Loan/Advances details

6. Specific Data if any.

DATA OUTPUT GENERATED BY KBG INVOLVES THE BELOW:

Payroll Processing

Updating Records & Registers

Income Tax Computations

Pay sheets as per requirement i.e.Dept.wise, site wise.

PF Reports

ESI Report

Last Month pay reconciliations

Pay slips

Fringe Benefit Tax and Employee Perks

Leave Travel Computation (Periodical)

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Reimbursements handling.

OUT PUT FOR EMPLOYEE

1. Sending Pay slip through Mail.

2. Sending TDS estimation through mail

3. Personalized assistance for Tax Planning.

4. Query handling through mails.

5. ONLINE viewing of the salary and tax details

Statutory Compliances (Monthly & Periodical)

Form 6A, 3A, 9, 5A, 13, 12A, 11 and 2 under PF.

Labor Welfare Fund Register

Form 16, 12B, 12C, 24 and 12BA under Income Tax

Act.

Filing IT Returns for employees on specific assignment.

Profession Tax Return

Filling of Quarterly E-TDS Return for Salaries.

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14. Maintenance of Secretarial Records

Incorporation of all types of companies, Foreign Branch Offices / Liaison Offices in India, Wholly Owned Subsidiaries, Joint Ventures and Limited Liability Partnerships. Services include expert advice on Guiding the clients on the appropriate form of organization be it Company / LLP / Partnership Firm / Proprietary Concern.

Some of the Startup Set up Services include Incorporation of Companies / Partnerships / Proprietary concerns / Society / Foreign Liaison Office / Foreign Branch Office / Wholly Owned Subsidiary / Joint Venture company / Sec 8 License Company; obtaining Permanent Account Number (PAN); Tax Deduction Account Number (TAN); Importer Exporter Code (IEC); Shops & Establishment Registration (S&E); Professional Tax Registration (PT); Provident Fund Registration (PF); Employee State Insurance (ESI); Service Tax Registration; 100% EOU Registration from STPI / SEZ; Customs Private Bonded

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Warehouse License (CPBW); Central Excise Registration, SSI Registration (MSME Registration); Industrial Entrepreneur Memorandum (IEM); Trade License from local authorities etc.

A Company registered in India, has to maintain some records as per the Companies Act, 1956.Yearly at least 4 Board meeting has to be conducted Yearly at least 1 AGM has to be conducted

Minutes of the above meetings to be recorded and Resolutions passed if any have to circulated In India, for a Pvt. Ltd Company it is usually a paper meeting. But records and papers to be in tact at all times.

Registers and Records are:

Shareholders register

Directors register

Share capital Details

Transfers/Changes in ownership

Board minutes

General meeting minutes

Meeting Attendance Registers

Secretarial records

Share certificates

Common Seal

Statutory documents

Digital signatures

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Conclusion

The Industrial Practice School program has taken my experiences to new heights, I got a wonderful opportunity to learn the basics of Accounts, taxation, payroll, secretarial issues and understand the market trends. So, it can be concluded that this program has provided me with a golden opportunity and my company guide and the director of the company Mr. Butchi Babu Gorantla who has helped me a lot to exploit the wonderful break. I got training of high quality from highly qualified professionals. I too tried up to my best levels to give my best .The total team was very cooperative and friendly.

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BIBLIOGRAPHY

https://www.aces.gov.in/

https://incometaxindiaefiling.gov.in/

http://contents.tdscpc.gov.in/

https://www.tin-nsdl.com/

https://www.stpi.in/

http://www.sezindia.nic.in/index.asp

http://www.icai.org/

http://www.icsi.edu/

http://www.tallysolutions.com/website/html/index.php

https://myascentpayroll.com/

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